Forex dealers call for law review

Forex bureau operators have called on the central bank to review the law that compels them to buy currency from commercial banks.James Kamushana, the president of the Rwanda Forex Bureau Association (RFBA), said it was unfair to be forced to buy currency for their businesses from competitors. “Many of the commercial banks don’t want to deal with forex bureaus... They withhold currency and also sell at higher rates. This forces us to also increase rates, which is hurting our businesses,” Kamushana noted.According to central bank financial regulations, commercial banks are obliged to sell dollars to forex bureaus at a profit margin of 1:2, depending on the rates prescribed by central bank.Dieudonne Bakunda, a treasury dealer at BCR, said they sell currency to forex bureaus according to rates set by the central bank, and also depending on the source of the currency.“Forex bureau operators should understand that we do not buy all currencies from the central bank. We also outsource some of the currencies from private individuals at market rate.“If we all buy currency from the varying sources, the rate cannot be the same as that sold by the central bank,” Bakunda said.He also noted that a bank’s foreign currency position determines how much money an individual forex bureau would be sold by a commercial bank.“Normally, it should not go beyond 9 per cent of the stock. Also, sometimes we have situations where customers, especially importers, want a lot of dollars when we have to cater for the forex bureaus too. In such cases, we give importers the first priority. That is when bureaus start accusing us of withholding currencies,” he explained.For the forex dealers boss, this is why it is important to amend the law so that forex bureau operators can buy foreign currencies, at least through their umbrella group, directly from central bank.“We can’t grow as a business if our competitor is also the boss,” Kamushana added.Dickson Musoni, the Bank of Kigali treasury manager, said the central bank always notifies both commercial banks and forex bureaus through emails about the market price.“There is no way a commercial bank will overcharge a forex bureau operator because the central bank has put in place a system of checks and balances to control monetary inflation and devaluation of currencies. Some of these measures include notifying all the stakeholders,” Musoni noted.According to Bakunda, every forex bureau is supposed to receive on average $50,000 (about Rwf33m) per day.Bakunda noted that commercial banks don’t see forex bureaus as competitors. “They are our partners in business because we are their suppliers. It’s not that when we supply them at a profit margin of 2 per cent, they always carry it forward to their clients… they are not making losses as alleged,” he explained. Forex bureau operators also want the central bank to waive the requirement for supporting documents when they are filing weekly reports for the regulator.“The law requires that a client trading large sums of money presents photocopies of his identification documents. “However, most clients are not comfortable with the requirement and will not give you business when you insist on the law. The regulation is hurting our business,” Kamushana said.Jane Nyamwiza, a dealer at Kesementi in Remera, said customers were no longer taking them as business partners but as security agents. “Why should we police clients? It is important to respect their privacy,” Nyamwiza noted.About two months ago, the central bank closed 15 forex bureaus because “they had filed reports without supporting documents while others did not deliver the reports on time as prescribed by the law”.Joy Ntare, the director general in charge of financial stability at the National Bank of Rwanda, explained that the current monitory policy does not authorise the central bank to deal with individual forex operators “because they are intermediaries that deal with transactions that involve small amounts of money”.She noted that unlike commercial banks, where foreign currency is mainly for importation, bureau operators are intermediaries that are majorly for smaller transactions.She further noted that support documents are very crucial in combating financial crimes such as money laundering.“We need strong mechanisms to mitigate risks such as money laundering or financing terrorist activities in the region. This can only be done by ensuring clients show the source of money and other support documents,” Ntare explained.Rwanda passed the Anti-money Laundering and Combating Financing of Terrorism Law in 2008.There are about 146 forex bureau operators countrywide.